Nimbus Projects Limited Vs DCIT (ITAT Delhi)
Seized Third-Party Document with Matching Cheque Entries Is Not a “Dumb Document”: Cash Payments Upheld u/s 69C
The Delhi Bench of the ITAT, in Nimbus Projects Ltd. v. DCIT (AYs 2015-16, 2016-17 & 2017-18), upheld additions made under section 69C on account of alleged cash payments to Proform Interiors Pvt. Ltd. based on documents seized during a search on the Proform Group. The Tribunal rejected the assessee’s contention that the seized papers were “dumb documents” or inadmissible third-party evidence.
It was noted that the same seized document contained both cheque and cash entries, and the cheque entries were found to exactly match transactions recorded in the books/bank accounts of the assessee and its group concern (Nimbus Propmart Ltd.). Once part of the document stood corroborated, the Tribunal held that the document had to be read as a whole, and the assessee could not selectively accept cheque entries while denying cash entries. Applying the test of preponderance of probabilities (relying on Sumati Dayal and Swati Bajaj), the ITAT held that the seized material was reliable evidence and that the onus had shifted to the assessee to explain the cash payments, which it failed to do.
Accordingly, the ITAT confirmed additions of ₹40 lakh (AY 2015-16), ₹20 lakh (AY 2016-17) and ₹2 lakh (AY 2017-18) as unexplained expenditure and dismissed the appeals, holding that loose sheets with corroborated entries cannot be brushed aside as dumb documents
FULL TEXT OF THE ORDER OF ITAT DELHI
